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December 2017

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Mexico is likely to seek intervention of the World Trade Organization as its talks with China over government aid to textile producers have failed, a spokesman of Mexico’s Economy Ministry has said.

Alleging that China is indulging in unfair trade practices by extending preferential benefits to Chinese clothing and textile businesses, Mexico lodged a complaint against China before WTO in October 2012.

Mexico alleged that Beijing was providing subsidies to its producers in the form of exemptions from income-tax, value-added taxes, municipal taxes, etc. Moreover, Chinese producers also benefit from direct fund transfer and debt forgiveness policies of Chinese Government, and also from discounted power charges, loan rates and land rights, which is against WTO rules.

As per the WTO rules, both countries have 60-day period to discuss and reach an amicable solution, before a dispute panel can be set up.

In its statement, the Mexican Ministry said that seeking establishment of a dispute panel under WTO is quite obvious where two member nations fail to reach an agreement during the consultation period.

The European Union, Honduras, Brazil, Guatemala, Australia, Peru, Colombia and the United States have shown interest in taking side with Mexico, but China denied allowing other countries to join the talks, the Ministry said.

This is the fourth complaint filed by Mexico against China in the WTO. Both Mexico and China are intense competitors in the US market and also vie each other for attracting foreign investment.

The 60-day period ends on December 15, after which a dispute panel can be set up by the WTO.